SCH2017_DRF_EN_Livre.indb

3

Corporate governance report Interests and compensation of Group Senior Management

Annual Incentive For 2018, the board proposes that the measurable financial objectives determine 84% of the variable compensation in cash of Messrs. Tricoire and Babeau ( vs. 75% in 2017). Award targets for

both Corporate Officers remain the same (130% and 100% of base salary respectively), and variable compensation may not exceed 260% of base salary for Mr. Tricoire and 200% of base salary for Mr. Babeau. The progression of the amount between 0% and these 2 limits is linear.

Maximum Target Achievement (%)

Minimum Target Achievement

Maximum Target Achievement (€)

Award Target (€)

Target (as a % of Base Salary)

Officer

Jean-Pascal Tricoire Emmanuel Babeau

130% 100%

€1,300,000

0% 0%

260% 200%

€2,600,000 €1,360,000

€680,000

The board decided to align further the Group’s strategy and the Corporate Officers’ compensation and strengthen the relationship between pay and economic performance. To this end, the board reduced the individual objectives to 10% and increased the weight of the economic criteria linked to the company program to 24%, bringing the total weight of the transformational objectives of the company program to 30%, as reflected in the graphs below:

Weight 84%

Economic Criteria

60%

Group financial indicators E Organic growth of the Group E Adjusted EBITA margin (Org.) improvement E Group cash conversion rate

30% 20% 10%

Company Program economic priorities E Field services (without process automation) sales growth E Systems commercial margin (projects and equipment) improvement E Digital index (1)

24%

8% 8% 8%

6%

Non-Economic Criteria E Planet and Society Barometer

6%

Individual Assessment by the board E Individual goals determined by the board based on the Company’s strategic plan

10%

10%

100%

TOTAL

100%

(1) The precise nature of this criteria is not disclosed to protect business confidentiality.

WEIGHT OF ECONOMIC CRITERIA

WEIGHT OF MESURABLE CRITERIA

10%

16%

20%

20%

25%

40%

84%

90%

80%

80%

75%

60%

2018

2016 2017

2018

2016 2017

Economic

Sustainability & individual

Measurable

Qualitative

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

202